Worksheet for Unit 9 on Monopoly:
Welcome back to Acme Widgets, the firm from the last worksheet. Conditions have changed. Acme got tired of competing in the perfectly competitive widget market where it couldn’t make any economic profits long-run. So, The Acme Company has conducted some serious R&D. It has created a new, patented Rocket-powered Mega-WidgJET (trademark). Nobody else has a rocket-powered widget and, surprisingly, there’s a strong demadn for the new Rocket-powered Mega-WidgJET. The following table represents the expected pricing and demand for the new product as well as costs for ACME.
INSTRUCTIONS: You should either print this page/table or copy the data into a spreadsheet.
If you wish, you can download these data tables as a .csv file that can be opened in Excel or similar spreadsheets. Download as .csv file.
If these tables do not print when you use the “download as .pdf” button at the top of this page, you can click here to open the data tables as a new webpage and print using your browser.
Then you need to complete the remaining columns using the data given. You can then answer the questions below using the data you have calculated. TIP: For questions that require an answer in money, please use dollar signs but use decimals. Ex: if the answer were $9.99 or -$9.99, you should enter either $9.99 or -$9.99 respectively. If the amount is less than a dollar, be sure to put a 0 for the dollar amount such as: $0.33
TIP: the cost data here (MC, AVC, and ATC) is the same as the worksheet for Unit 8. If you still have that data, you may want to copy it to save time.
Questions (you enter your answers in the Learning Management System for your school):
- What is total revenue from sales if Acme chooses a price of $6.00?
- When Acme was in competition they produced 12 units. What is the highest price Acme could charge now if they wanted to sell 12 units?
- If Acme is a profit-maximizing single-price monopolist, how many units will they choose to produce?
- At the level of output that maximizes profits, what will the Marginal Cost be?
- At the profit-maximizing output, what is the average cost of each of the units produced? (round off to the penny)
- What is the maximum price that can be charged for each unit when the profit-maximizing output quantity is produced?
- Using the answers to previous questions, what is the average profit per unit when the profit maximizing output is produced and sold?
- How much profit (total) will this firm make when it maximizes profit in the short-run?
- In comparing the results of this worksheet with those of the previous worksheet (Acme in Perfect Competition), what effect has achieving a monopoly had on Acme’s profits? (order of answers may be different in learning mgt system)
- Increased profits?
- Lowered profits?
- Profits are unchanged.
- In comparing the results of this worksheet with those of the previous worksheet (Acme in Perfect Competition), what effect has achieving a monopoly had on Acme’s customers?
- they pay higher prices and buy fewer units
- pay higher prices and buy more units
- pay lower prices and buy fewer units
- pay lower prices and buy more units